The Russian ruble has strengthened more than all other currencies in emerging markets and the country’s securities are showing excellent performance. All this happens amidst the stock prices of other developing countries are falling. The sharp increase in energy prices leads to a rise in rates on exporters from developing countries, so Russia is becoming a favourite investment target for traders, as stated by Bloomberg.
According to RIA Novosti, a record increase in world energy prices was explained by the sharp increase in the cost of futures with a low level of filling of underground gas storage facilities in Europe, as well as with high demand for LNG in Asia.
As reported, currently, investors are evaluating the assets of energy exporters, trying to determine who has the best offer. They start with Russia and end with Colombia, whose currency was in second place in terms of its indicators this month.
“Energy prices will remain high, and companies from commodity-exporting countries will benefit from a shortage of energy supply,” the Chief Investment Specialist at Carrhae Capital, Ali Akay, said.
The unrest in the energy market has drawn attention to Russia as an oil and gas superpower. On Monday, the value of Russian oil exports in local currency reached a record high, amounting to about 6,000 rubles per barrel of Brent. An analysis of the profitability of Russian stocks in comparison with other emerging markets shows significant discrepancies. Forecasts for the annual profitability of shares listed on the Moscow Stock Exchange have increased by 15 per cent since the middle of the year, which suggests that there is a potential for an increase in the exchange rates of securities.
It is stated that investment funds such as London-based Carrhae Capital reacted to this situation by partially abandoning shares of Chinese technology firms and switching to shares of Russian energy companies. The asset management Wells Fargo Asset Management company has also transferred its investments from China to Russia. JPMorgan Chase & Co. strengthened its position in the Russian deposit index, feeling optimistic about commodity and oil stocks.
David Silvestrini‘s strategic analysis group commented on this in their report, “The increase in oil prices will contribute to the growth of profitability and dividends of shares of energy companies, which account for 59 per cent of the index. This will strengthen the ruble, which in turn will help the growth of quotations of Russian stocks, which make up 25 per cent of the index. Thus, it suits us perfectly as an asset engine. We give optimistic forecasts for raw materials and for oil in particular.”
Despite other countries accused Russia of benefitting from the situation and promoting the fuel price spikes, the country’s President, Vladimir Putin, stressed that Russia is ready to help stabilize the situation with blue fuel and deliver all of the natural gas that Europe needs.